Prominent Chicago Northside landlord Becovic acquired a 96-unit Edgewater apartment building for $17.4 million, one of six properties that New York-based CLK Properties has been selling off as it appears to be pulling out of Chicago.
Becovic Residential bought the property at 5411 North Winthrop Avenue for an average per-unit price of $181,250. The landlord has a strong presence in North Side neighborhoods like Edgewater, Uptown and Rogers Park.
With this addition, Becovic has now bought four of the six properties in a portfolio of buildings CLK Properties purchased from Cedar Street in 2016 and is selling off.
Cedar Street is a Chicago-based real estate company known for purchasing and renovating run-down, financially distressed multifamily buildings. Its sale of the six-building portfolio, known as the Flats Chicago, to CLK for $67 million represented its biggest deal when it was sold in 2016. Of that total, CLK Properties paid just under $4.7 million (under $49,000 per unit) for 5411 North Winthrop, property records show.
“It looks like they’re getting out of Chicago. I’m in Chicago for the long run. We’ve been here for over 50 years,” Becovic Residential president Sal Becovic said.
CLK Properties, based in Woodbury, New York, could not be reached for comment Wednesday.
The six-building portfolio includes 5051 and 6134 North Kenmore, 5711 and 5718 North Winthrop, 4875 North Magnolia and 1325 West Wilson, representing 435 residential units plus retail space.
The only property still available is 1325 West Wilson, Becovic said. As for whether his company is looking to add that 125-unit Uptown property to its portfolio, Becovic said, “it all depends on timing,” but he’s not opposed to the idea.
“We have a good relationship with the seller,” Becovic said. “It just so happened that these four deals came out at the right time, and we were ready for them, and they just fit well with what we’re doing.”
This most recent deal, which closed Jan. 2, was brokered by Kiser Realty Group. Becovic’s property management arm will take over management of the building, Becovic said.
Becovic secured financing from JP Morgan Chase Bank at a rate “over 6 percent,” a hit that Bercovic said he plans for given current market conditions.
“If you would have told me what my rate was two years ago, I would have said this was the kind of joke that someone was playing on me that would not have been a friendly one,” he said. “You just have to pencil out from the get-go. You can’t be blowing smoke up yourself or anyone else, and just operate. This is an operator’s market. The high-flyer is dead.”
That means assessing whether local renters will tolerate an increase in rent to help cover costs before moving ahead with a deal, he said. Becovic managing its own properties makes it easier to keep track of whether top line revenue is keeping up with major expenses, like property taxes and operational labor, across properties, Becovic said.
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